AMA Forms Company to Leverage Silicon Valley for Healthcare

Ken Terry

January 12, 2016

The American Medical Association (AMA) is investing $15 million as the founding partner in Health2047, a San Francisco-based incubator for "healthcare innovation" products. The AMA's goal is to harness Silicon Valley's technology talent to help solve key problems in healthcare, said James L. Madara, MD, the AMA's chief executive officer (CEO), at a news conference on Monday.

"We have a relatively dysfunctional health system that's fragmented," he noted. "Our physicians are burning out. They don't have the tools they need. The market isn't working for them. We have to improve the efficacy of practice and the betterment of physician-patient interactions by creating a new [health information technology (IT)] market and refining what's out there."

The standalone, for-profit Health2047 — named for the upcoming 200th anniversary of the AMA — will work "in partnership with leading companies, physicians, and entrepreneurs to improve health care," according to an AMA press release.

In this endeavor, it will "draw upon the AMA's deep subject matter expertise and the organization's unique relationship with physicians nationwide to develop new products, tools and resources that improve the practice of medicine and the delivery of health care to patients," according to the news release.

Health2047 will collaborate with AMA content experts in medical, health policy, and physician practice areas. The incubator will work with healthcare and technology companies and entrepreneurs "to co-develop, create and spin out offerings that can have a large-scale, systemic impact on health care and medical practice."

"Investable Concepts"

At the news conference, Doug Given, MD, CEO of Health2047, said that the company plans to work with established tech companies, "emerging growth" companies that already have a track record, and start-ups. Health2047 already has a team of scientists and engineers that can develop prototypes of new products in less than 90 days, he said. It will release the "investable concepts" to the market.

The firm intends to generate revenue from corporate licensing fees and royalties, as well as the return on equity and/or cash it will receive from emerging growth companies, Dr Given said. It will also coinvest in start-ups and take equity in those firms. Among the product categories Health2047 will look at are "connected health," including interoperability, "high-quality networking," and value-based care.

The focus of Health2047's work with established companies, he said, will be to help them fine-tune their solutions for healthcare, where Silicon Valley companies have not been as successful as they have been in other sectors. The firm will also work with entrepreneurs to make sure their products fit the physician market.

The AMA stands behind Health2047 with its hundreds of "content experts." It will also encourage physicians to participate in efforts to create products that will benefit them, and Dr Madara said many AMA members are interested.

Dr Given said it might take tens of thousands of physicians to form a representative panel that tech companies could use as a sounding board. Some of these doctors might also be interested in beta-testing new products across diverse practice settings.

The AMA last year formed another partnership with MATTER, a Chicago-based health IT incubator. In November, the partners announced the launch of a studio to support closer collaboration between entrepreneurs and physicians. The AMA Interaction Studio gives start-up firms the opportunity to interact with doctors in a simulated medical office to test their products. Prior to the studio's launch, MATTER said, hundreds of physicians had visited its website and had offered feedback to entrepreneurs working on early-stage technologies.

The AMA has had a mixed record on its partnerships with private-sector firms. In the late 1990s, its endorsement of Sunbeam products caused a scandal that resulted in the AMA reneging on its contract with Sunbeam. The upshot was that several AMA executives resigned and the organization had to settle a Sunbeam lawsuit for $10 million.

In response to a question from Medscape Medical News, Dr Madara said that the AMA would not endorse any new products developed with the aid of Health2047. "The AMA and Health2047 are separated by governance. They're independent corporations," he said.

In 2009, the AMA signed a deal with Covisint, a Compuware Corporation subsidiary, to deploy a solution that would give AMA member physicians access to a range of information technologies, including cloud-based electronic health records (EHRs) and practice management systems. A year later, NextGen announced that its EHR had been chosen for the project. In 2011, the AMA said it would work with Covisint to help physicians submit quality data to Medicare's Physician Quality Reporting System (PQRS).

There has been no news of this partnership in recent years, but Covisint still offers a registry that physicians can use to report to PQRS.

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